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Revenue Recognition: Principles, Changes, and Practices 2 Credits

Oct 12, 2022, 01:30 PM ET

Revenue Recognition: Principles, Changes, and Practices 2 Credits

Topic 606: Revenue Recognition for Software and Technology - Part 1

  • Rating

    4.4
  • Reviewed on

    February, 2024
  • Subject Area

    Accounting

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Oct 12, 2022, 01:30 PM ET

Learning Objective

  • To review the changes to the revenue recognition process for software and technology and companies that deal in this industry.
  • To identify the basic principles of revenue recognition for software and technology and companies that deal in this industry. 
  • To discuss the five-step process of revenue recognition using software and technology as an example
  • To analyze the practices involving revenue recognition and accounting for costs of computer software. 

Course Overview

With the updated revenue recognition standards, recognition for software and technology is expected to continue to present challenges for FS preparers.

In May 2014, FASB and IASB issued largely converged revenue recognition standards.  This new guidance replaces virtually all current revenue recognition guidance, including software revenue recognition guidance in ASC 985-605. The accounting change will be especially notable for software/technology companies and may require modification to systems, processes, controls, and documentation to meet the new requirements.

Ways of doing business continue to evolve as do the views of the standard setters and regulators.  It is imperative that any company required to apply the software revenue recognition standards be thoroughly knowledgeable of the guidance. The new guidance will change how software entities are recognizing revenue for these contracts in a few notable ways.

Most companies in the software industry will be significantly affected. The level of modification to current revenue recognition practices will depend on the nature of the company’s revenues. Those companies with software license revenue will be the most affected.  There will be a lesser impact on the recognition of software-as-a-service (SaaS) revenue.

Software companies' arrangements with customers often include multiple components wrapped into one contract. These could include:

  • Software licenses
  • Software-as-Services (SaaS)
  • Post-contract customer support (PCS) 
  • Other goods or services. 

ASC 606 provides a more defined structure for assessing all revenue transactions and consists of five elements:

  • Identify the contract with a customer
  • Identify the performance obligations (promises) in the contract
  • Determine the transaction price
  • Allocate the transaction price to the performance obligations
  • Recognize the revenue when (or as) the reporting organization satisfies the performance obligations

This CPE Accounting webinar is part one in a two-segment series that will deal with Revenue Recognition for Software and Technology companies.  It is designed to provide insight related to the new revenue recognition standard as it applies to software and technology processes. 

Have a look at Revenue Recognition Certificate Course, we have on our website authored by Lynn Fountain.

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Additional Information

Credits

2

Course Level

Basic

Instructional Method

QAS Self Study
Group Internet Based

Pre-requisites

None

Advance Preparation

None

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MY-CPE LLC (Sponsor Id#: 143597) is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors.

About Instructor

Advance Your Career with Lynn Fountain's CE/CPE/CPD Webinars
Lynn Fountain , CRMA

Owner, Lynn Fountain Consulting and Training

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Lynn Fountain has over 39 years of experience spanning public accounting, corporate accounting and consulting. 20 years of her experience has been working in the areas of internal and external auditing and risk management. She is a subject matter expert in multiple fields including internal audit, ethics, fraud evaluations, Sarbanes-Oxley, enterprise risk management, governance, financial management and compliance.  Lynn has held two Chief Audit Executive (CAE) positions for international companies.   In one of her roles as CAE, she assisted in the investigation of a multi-million-dollar fraud scheme perpetrated by a vendor that spanned 7 years and implicated 20 employees.  The fraud was formally investigation by the FBI and resulted in 5 indictments estimating a $13M fraud loss.

Ms. Fountain is currently engaged in her own consulting and training practice.  She has successfully executed on several consulting assignments spanning areas of accounting, risk, ERM and internal audit.  She is a highly sought-after trainer and international speaker and has produced hundreds of courses delivered through seminars, conferences and on-demand training.  She is the author of three separate technical books.  

  • Raise the Red Flag – The Internal Auditors Guide to Fraud Evaluations”.
  • Leading the Internal Audit Function
  • Ethics and the Internal Auditor’s Dilemma

Ms. Fountain obtained her BSBA from Pittsburg State University and her MBA from Washburn University in Kansas. She has her CPA, CGMA, CRMA credentials. 


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To maintain compliance, you must follow the guidelines set by NASBA and other regulatory bodies, which include completing the course within the specified timeframe, passing the assessments, and keeping accurate records of your learning activities.

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A Live Webinar Group Internet-Based Credit is an interactive, real-time online seminar where professionals can earn Continuing Education credits by participating in live sessions led by experts in various fields. These sessions meet the standards set by NASBA, IRS, CFP Board, HRCI, SHRM, Payroll Org, FP Canada, and 25+ other regulatory bodies.

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To earn credits, you must attend the entire live webinar, actively participate in any polls or questions, and complete any required evaluations or assessments. Credits are awarded based on your attendance and participation in the live session.

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Yes, all our live webinars are approved by NASBA, IRS, CFP Board, HRCI, SHRM, Payroll Org, FP Canada, and 25+ other regulatory bodies, ensuring they meet the high standards for quality, interactivity, and educational content set by these organizations.

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After successfully attending a live webinar and fulfilling all participation requirements, you can access and download your completion certificates from your account dashboard on our platform. These certificates are recognized by NASBA, IRS, CFP Board, HRCI, SHRM, Payroll Org, FP Canada, and 25+ other regulatory bodies for compliance and reporting purposes.

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We issue instant credit certificates, ensuring they are valid for presentation to governing bodies. Typically, we report IRS, CTEC, CFP, IDFP, IWI, VBOA Ethics credits within 7 days – the fastest in the industry.

Reviews and Ratings

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PA

Patricia Anderson, CPA (US)

Very helpful introduction to Revenue Recognition for Software andTtechnology

TB

Tyler Barnett, CPA (US)

Outstanding course with great summary and examples.

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